Securities regulation — Offences — Appellants found guilty of tipping
and insider trading — Evidence largely circumstantial — M’s liability
based on s. 76(5)(e) of Securities Act — Liability under s. 76(5)(e) not
requiring that person charged had ability to trace information back to
its originator — M’s liability established on basis that he obtained material non-public information from friend of another appellant and ought
reasonably to have known that information originated from insider —
Panel drawing reasonable and logical inferences from proven facts in
relation to all appellants except C — Panel making number of factual
errors in its analysis of evidence in relation to C — C’s appeal allowed —
Other appeals dismissed — Securities Act, R.S.O. 1990, c. S.5, s. 76(5)(e).

Securities regulation — Penalties — Four appellants found guilty of
tipping and three of them also found guilty of insider trading — Administrative penalties of $150,000 for each violation affirmed on appeal.

The appellants were found guilty of tipping. All of the appellants except F were
also found guilty of insider trading. F was a corporate and commercial lawyer
and a close friend of A, who was also his investment advisor. A, B, M and C were
employed in the securities industry. A and B were close friends and worked
together. The evidence was largely circumstantial. The panel found that the
tipping chain began with F, who provided material non-public information to
A regarding three corporate transactions. A provided material non-public information to his friend LK and to B. LK passed the tips along to M, who worked
with C. The appellants appealed the merits decision and the penalties imposed.
A and B sought to adduce fresh evidence in the form of an affidavit from
A about a problem which A and B experienced with an expert witness who was
retained by their counsel to assist counsel in challenging the respondent’s
evidence. The expert lost her work product through a computer error several
months before the hearing commenced, and the panel refused A and B’s
request for an adjournment.